Employer identification number refers to a unique 9-digit code which is typically used in the filing of taxes. It is also referred to as a business tax ID and it comes in handy when registering a new business, obtaining loan for your business, or even during the opening of a bank account. Some businesses have the tax id (EIN) as a requirement while it is optional in others. Applying for this number online is easy and you should not have an excuse as to why you do not have it. Some of the reasons you should consider taking it to include:

Filing Taxes and Avoiding Tax Penalties - It is clear that some businesses have EIN as a critical requirement. In this, you should do your research before the tax day nears as sometimes it may take up to 5 weeks to get the tax ID. This ID is critical to any business owner that has the desire to get tax benefits as it makes the case better.

Preventing Identity Theft - Another reason to apply for a tax id is to take care of identity theft. This is because an EIN is able to separate both business and personal finances. It means that once you have an EIN, you do not need to disclose your SSN which is more personal to clients or vendors. Giving out your EIN is safer as the theft of these numbers is not widespread as in consumer identity theft.

Adding Credibility - For independent contractors and freelancers, they would do anything to reinforce their status as legitimate business owners. Besides, taking a client requires that you have either the SSN or the EIN before they can furnish you with a 1099 tax form. When you have the EIN, the credibility of your business is boosted. By this, companies will be attracted to hire you as there are minimal legal responsibilities and financial resources are also conserved. It is therefore clear that an EIN separates an independent contractor or a freelancer from those that are practicing their hobbies.

Speeding Business Loan Applications - Having an EIN will speed up the process of loan applications. Remember that most lending institutions will not ask for this number as long as you have the right business permits or licenses. However, most lenders want applicants of loans to have business bank accounts that have deposits. To get a business bank account, a Tax ID (EIN) is essential. Some other lenders will check your business credit which is highly determined by the EIN. Applying for this ID as early as now is recommended so as to save you such loan application hustles.

Hiring Employees - If you are on the verge of hiring employees, you will need the tax ID. It might not be an immediate requirement but as the business grows, you will need to scale up and put in place payroll systems. This ID hence helps you grow your business over time.

The above shows that the Tax ID (EIN) is an important tool that helps you in the corporate world to scale your business. Make sure to apply for it so that your firm benefits in all aspects.

Author's Bio: 

Hi, I am Christopher. I am blogger from USA, and writing is my passion. I love to explore creative things and learn new things. I write what i learn and share with people.